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New online service another disruption for cable TV

In this Thursday Dec. 20 2012 phoChet Kanojifounder CEO Aereo Inc. stands next server array antennas as he holds an

In this Thursday, Dec. 20, 2012, photo, Chet Kanojia, founder and CEO of Aereo, Inc., stands next to a server array of antennas as he holds an antenna between his fingers, in New York. Aereo is one of several startups created to deliver traditional media over the Internet without licensing agreements. Past efforts have typically been rejected by courts as copyright violations. In Aereo’s case, the judge accepted the company’s legal reasoning, but with reluctance. (AP Photo/Bebeto Matthews) ORG XMIT: NYBZ124

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Updated: September 9, 2013 7:53PM

Consumers are getting a new way to tune into television, now that an online TV service called Aereo is expanding into the Chicago market.

Aereo converts free, over-the-air signals — the same signals picked up with varying degrees of success by old-fashioned TV antennas — and sends them via the Internet to subscribers’ computers and mobile devices. For $8 a month, customers can watch live, local broadcast stations on their iPods, iPhones, desktops and laptops, as well as on HDTV screens connected to a Roku box or Apple TV. An app for Android devices should be available within weeks. Programs also can be recorded on a virtual DVR.

“It’s an updated set of rabbit ears,” said Virginia Lam, vice president of communications and government relations at Aereo. Those who pre-registered for the service at could start accessing it as early as next week, she said, with the general public following shortly after that.

If broadcasters had it their way, Aereo wouldn’t launch at all. Major networks would like nothing more than to shut down this start-up founded by Indian entrepreneur Chet Kanojia and backed by media mogul Barry Diller. Aereo threatens the lucrative retransmission fees broadcasters collect from cable and satellite providers, who paid CBS, NBC, ABC, Fox, CW and Univision-owned stations an estimated $1.7 billion last year. Aereo pays them zilch.

Major broadcast networks sued Aereo for copyright infringement after the service became available last year in New York. So far, the courts have sided with Aereo, which is wasting no time expanding its footprint. The company has set up shop in Boston, Atlanta, Miami and Salt Lake City. Chicago is next, followed by Houston and Dallas later this month.

“It’s an exciting, innovative idea,” said technology industry analyst Jeff Kagan. “For years, we’ve been complaining about the uncontrollable rising prices of cable television. Aereo represents choice. It’s a big wake-up call to the industry.”

Like popular streaming services Netflix, Hulu and Amazon, Aereo is yet another tool in the cable cord-cutting box. The trend of pulling the plug on pay-TV is on the upswing as consumers balk at rising cable bills. Nielsen estimates that 5 million U.S. households last year didn’t have a “workable” TV set compared to 2 million in 2007. The vast majority of those homes still consumed video content, but they did it through non-traditional means, such as the Internet.

What Aereo does is allow users to access live broadcast television both in and out of the home. For instance, when the Blackhawks play on WGN-Channel 9, Aereo subscribers can catch the action on their smart phones anywhere within the Chicago market’s coverage area, spanning 16 counties in northeast Illinois and northwest Indiana. Missed Patrick Sharp’s slapshot? Pause and rewind. (Aereo works better with WiFi as opposed to a cellular connection, which also is subject to data charges.)

Aereo’s $8 plan gives you access to roughly 40 broadcast stations and includes a remote DVR that lets you record 20 hours of programming that gets stored online. For an additional
$4 a month, subscribers get 60 hours of DVR space and can record two shows at once.

Aereo is able to deliver the signals through a farm of dime-sized antennas sitting on the roof of a downtown data center. These digital antennas capture over-the-air TV signals, convert them into computer data and stream them to subscribers who control their specific antenna and cloud-based DVR over the Internet.

“All the big stations are up in arms about it, but its bark is probably bigger than its bite right now,” said Brad Adgate, director of research at Horizon Media. “We don’t really know how popular it is because they’re not releasing any figures.”

Lam would not disclose how many subscribers Aereo has, citing ongoing litigation. Aereo did provide this reporter with one of its customers, Joseph Bronzino of Atlanta. “It was a happy day when I was able to call the cable company and say, ‘I don’t need you anymore,’ ” Bronzino said.

Bronzino had been shelling out about $150 a month for cable service. Now he gets his local channels (and Aereo’s sole cable network, the financial channel Bloomberg TV) for $12. He taps into his Netflix and Amazon Prime accounts to access many of the programs he used to watch on pay TV.

What Aereo doesn’t provide — and neither do services like Netflix or Hulu — are lots of sporting events. Aereo has other limitations. Issues with picture quality and buffering may crop up, and there’s no video on demand.

But Bronzino’s not complaining. “We’re not missing anything,” he said, “except the exorbitant amount of money we used to pay for television.”


Twitter: @lorirackl

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